International Gemological Institute Limited Q2 FY2026 Concall Summary

Key Takeaways

• Volume-led beat, mix masks price stability: 26% volume growth drove the quarter, while a 5% consolidated ASP decline reflects a geographic and product-mix shift toward smaller-carat goods and lab-grown jewelry, not underlying pricing pressure.
• Full-year guidance reaffirmed with upside bias: Management is confident of delivering over 15% revenue growth and 20% EBITDA growth, and flagged the possibility of surpassing both by a few percentage points.
• India domestic demand is the engine: The domestic market, insulated from tariffs, delivered exceptional Diwali-season performance and is expanding into Tier 2/3 cities, offsetting softness in the US and Europe.
• Lab-grown is still in early innings: Management sees no bottleneck for the lab-grown industry over the next three to four years, positioning IGI to ride structural volume growth as the category evolves.
• What to watch next quarter: Whether the US and Europe stabilize, any tariff-driven supply chain shifts that require capacity reallocation, and the pace of margin expansion toward the 40–45% PAT margin range.

Volume Growth & Realization

• Broad-based volume surge: Certification volumes grew 26% YoY in Q3, with Natural Diamonds up 29%, Lab-Grown Diamonds up 24%, and LGD Jewelry up 26%. Nine-month volume growth stands at 25% across all categories.
• ASP decline is mix, not price: Consolidated ASP fell ~5% because of a higher share of smaller-carat natural diamonds and lab-grown jewelry in the certification mix. Within-segment carat-size mix drove the decline; India ASP actually rose 2% YoY.
• Geography amplified the mix effect: The US and Europe, which carry higher realizations, underperformed, while the Middle East (jewelry-driven) and China (lab-grown heavy) grew strongly, pulling down the consolidated ASP despite India's increase.
• Jewelry carat mix shift: The average jewelry piece now carries about one carat-plus versus one-and-a-half carats previously; the size of diamonds per piece has decreased but quantities have increased, a jewelry-specific mix shift rather than lower caratage in loose diamonds.
• Revenue-volume convergence: Revenue growth and volume growth are now roughly the same, give or take a couple of percentage points, signaling that pricing has stabilized after cycling a large ASP decline in the prior year.

Geographic & Channel Dynamics

• India domestic strength: Indian consumption was extremely strong, with the Diwali season driving exceptional performance. Tariffs have virtually no impact on the domestic sector, and IGI is gaining ground in Tier 2 and Tier 3 cities.
• International divergence: The Netherlands holding entity (covering Dubai and China) grew revenues at ~20%, while Belgium and US entities saw softness, consistent with trends from the prior two quarters.
• US and Europe play a dual role: Beyond direct certification revenue, these offices engage large retailers to influence them to specify IGI certification from Indian manufacturers, a strategic function that matters more than the local P&L.
• Customer base breadth: IGI serves the entire supply chain from manufacturer to retailer, including both large chain stores and independent stores; smaller and independent stores play a significant, possibly more significant, role on an overall basis.
• Tariff resilience: Tariffs have not played a significant role in the certification business. Even in international markets, the impact has been "quite insignificant." If supply chains shift, IGI is positioned to ramp capacity in Dubai, Hong Kong, or Turkey.

Printer: "Tariff from the international market... it is 12% in the US and 12% in Europe. So, that has been a little affected, but not too much. From a certification point of view, tariff has really been quite insignificant even in the international market."

Lab-Grown Diamonds & Industry Structure

• LGD kept factories running: Lab-grown diamonds helped the diamond industry maintain factory utilization, and domestic demand for LGD is evident and growing.
• Long runway ahead: Management sees no bottleneck for the lab-grown industry over the next three to four years; the lab-grown evolution is just starting, and the long-term outlook is "pretty positive."
• LGD jewelry expanding in India: The LGD jewelry space is rapidly increasing even within the Indian domestic market, adding a second growth vector alongside loose-stone certification.
• Natural diamond share gains: Natural diamond certification grew 29% in the quarter and 14% YTD, indicating market share gains in this segment alongside the LGD expansion.

Iyer: "I do not think there should be anything that should be a bottleneck over the next three to four years as far as this industry for lab-grown is concerned. So, that long-term outlook for us is pretty positive in terms of what we will, therefore, I think, ride the industry growth, so to say, over the next three to four years."

Margins & Costs

• D&A rising with capacity: Depreciation and amortization increased as the company deploys more fixed assets to expand certification capacity.
• PAT margin range indicated: Management offered a 40–45% PAT margin range when asked about stabilization, without specifying a precise stabilization point or timeline.
• Brand investment is modest: The Women's World Cup sponsorship, IGI's first attempt to leverage brand with a global tournament, was split across two quarters and is not significant enough to move the needle on expenses.
• Cash priorities: Some cash will be distributed as dividends; management is also keeping eyes open for acquisition opportunities but has no specific information to share at the moment.

Guidance & Commitments

Key Metrics